"Inflation remains the top priority of RBI and will remain the case. Rate hike came absolutely in a surprise form to the market. It is a matter of time that most of the gains which were build up by the market in the last 15 days will be back," Chief Strategist at SMC Global Securities Jagannadham Thunuguntla said.

BSE Sensex falls on profit-taking after a three-day rally and on caution ahead of the central bank's policy review later in the day. The benchmark index falls 0.3 percent, while the edges down 0.2 percent.